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Graphics from 4 empirical muckrakers – 3. Thomas Piketty — Modern Inequality
from Blair Fix
I don’t think I need to say much about Thomas Piketty. He’s probably the most famous economist in the world. Since publishing Capital in the Twenty-First Century, he’s become an academic rock star.
Many heterodox economists think Piketty’s theories of inequality are naive. I would be one of those economists. But this does not detract from Piketty’s empirical work. He’s a prolific inequality muckraker.
Together with other researchers, Piketty has created the World Inequality Database. It’s an invaluable tool for understanding modern inequality. I’ll leave you with one of Piketty’s most famous charts. Here’s the history of inequality in the United States:
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—— Ugarteche, Puyana and Madi ——
Gerson Lima / Maria Alejandra Madi
Edward Fullbrook and Jamie Morgan
————— Michael Hudson ————–
Maria Alejandra Madi / Jack Reardon
————- Edward Fullbrook ————-
—————— Steve Keen —————–
————— Richard Smith —————
————– Gustavo Marques————
– Victor Beker and Beniamino Moro –
————– Lars Pålsson Syll ————-
—————– Stuart Birks —————-
Edward Fullbrook and Jamie Morgan
———— Armando Ochangco ———-
Shimshon Bichler / Jonathan Nitzan
————— Mauro Gallegati ————–
————— Herman Daly —————-
————— Asad Zaman —————
—————– C. T. Kurien —————
————— Robert Locke —————-
I would like it if people, when they post a data chart, also say clearly what they think it means. This particular chart showing the share of national income flowing to the top 10 percent of the US population clearly says to me, “Federal policy related to the distribution of income started making some kind of sense in about 1942, continued to be relatively intelligent until the election of Ronald Reagan as president, and thereafter went completely off the rails.” Smart economists should have no trouble explaining the devastating inefficiency of having ten percent of the people getting half the total income, since this requires that a very large number of other people in the bottom several deciles will get practically nothing.
PIKETTY is doing what education in economics should be doing: think about the content of economics as such instead of thinking within one historically particular format, I e market thinking .
Piketty’s household (or “tax unit”) data is, in my opinion, virtually useless. The Gini for “All Persons” (individuals) has been flat for the last 60 years in the US. Please do not regale with comments about the “Top Coding” problem (this data set has been solid since 1993). As I see it the US Census Gini is far more informative regarding any growing inequality in America than Prof. Piketty’s tortured statistics. The increase in the share of top decile in national income is largely attributable to the 1986 Tax Act after which many top decile taxpayers switched from filing as “C” corporations to “sub-S”. Remember Thomas Piketty recanted much of what he wrote in “Capital: In the 21st Century” in 2015.
The Gini has not been flat. It was 48.9 in 1929, fell to 36.9 in 1940, and hovered around 36.5 for four decades (with a low of 35.3 in 1977); then increased after 1980, to reach 46.3 in 2011 (45.4 in 2015). The trajectory is pretty much the same as Piketty’s income inequality data.
See https://www.chartbookofeconomicinequality.com/inequality-by-country/usa/
The Federal Reserve of St Louis shows the same rise in the gini from 1980 to 2016 (Their chart lacks earlier data).
In the future kindly strive to read people’s posts more carefully. I cited the US Census Bureau’s Gini for “individuals” and you direct me to the “household” data which has acted as you described. Like it or not the Gini for individuals has remained flat since 1960. [See: the Census data since 1993 and Kitov & Kitov (2012) for the interval from 1960 till 1993.] The household data tracks Piketty’s “tax unit” data because households are a good proxy for tax filers. If you desire an even more detailed explanation regarding the economic hoax of rising US inequality (both income and wealth) please send me an email to rwburcik@gmail.com; The entire rising US inequality meme is a clear cut fraud.
And what has happened in the last decade?